Allegiant cancels A319 deal with Cebu Pacific

Allegiant Air has cancelled its deal to lease 10 Airbus A319s from Cebu Pacific, citing the inability to agree on economic provisions.

The Las Vegas-based low-cost carrier says that they failed to "satisfy certain conditions" in finalising an agreement with Cebu Pacific for the aircraft, in a statement. The two signed a letter of intent on 30 July 2012.

"We are disappointed that we were not able to finalise this agreement on which we spent a substantial amount of time and effort," says Andrew Levy, president of Allegiant. "Unfortunately we were unable to come to terms on some of the economic provisions of the transaction and as we have demonstrated in the past, we will not purchase aircraft just for the sake of growth. Our disciplined approach in asset purchases is a core competency that we will not compromise."

Allegiant was to acquire the aircraft on five-year capital leases with the intent to buy them at the end of the term.

The airline still plans to lease nine former EasyJet A319s from GE Capital Aviation Services (GECAS) and buy nine A320s from Iberia, it says.

Allegiant has taken delivery of the first A319 from GECAS, which is undergoing US Federal Aviation Administration (FAA) certification in San Antonio, and could introduce it to service as early as April 2013.

Levy says that seven of the A320s will be delivered in 2013.

The Airbus aircraft will be used for growth into new markets, including destinations in Mexico, the Rocky Mountains as well as airfields such as Charlottesville and Shenandoah Valley in Virginia, and Trenton, New Jersey.

Now that Etihad Airways has elected to stop funding Air Berlin, forcing the German carrier to file for assembly, a central question is which parts of the business can continue to operate in the long term.